US Wheat Review on Tuesday: Falls on technical selling, large supply

 

 

Technical selling and bearishness about large world supplies drove U.S. wheat futures lower Tuesday and pushed Chicago Board of Trade December wheat to a contract low.

 

CBOT December wheat closed down 8 1/4 cents at US$4.47 1/2 a bushel. Kansas City Board of Trade December wheat lost 6 1/2 cents to US$4.68 1/2, and Minneapolis Grain Exchange December wheat dropped 5 cents to US$4.83 1/4.

 

CBOT December wheat in electronic trading reached a contract low of US$4.41 1/4, below its previous low of US$4.48. The market has repeatedly notched new contract lows during the past month and a half amid a lack of supportive fundamentals.

 

An Egyptian snub and expectations for large quarterly wheat stocks dragged down prices Tuesday, according to Global Commodity Analytics & Consulting. Egypt bought 150,000 tons of Russian wheat in a tender and none from the U.S.

 

The USDA, in a quarterly stocks report due out Wednesday, is expected to report wheat stocks as of Sept. 1 were up from a year earlier. The average of analysts' estimates for stocks is 2.131 billion bushels, compared to 1.858 billion a year ago, according to a Dow Jones survey.

 

Wheat was the "real bearish issue" in the markets and weighed on neighboring CBOT corn and soy, Global Commodity Analytics said in a note. Holders of long positions "once again bailed out of wheat and pushed it back below US$4.50" in the CBOT Dec contract, the firm said.

 

Commodity funds sold an estimated 3,000 contracts at the CBOT.

 

 

Kansas City Board of Trade

 

KCBT wheat closed lower on a lack of friendly news, traders said. The Egyptian snub wasn't unexpected but didn't give prices any support, they said.

 

There was positioning ahead of the release of Wednesday's USDA data. Along with the stocks report, the government is slated to release a small grains report that analysts expect will increase the government's estimate for 2009-10 U.S. all-wheat output from last month.

 

 

Minneapolis Grain Exchange

 

The USDA is expected to raise its estimate for production of spring wheat other than durum in its small grains report, analysts said. There have been reports about strong yields in North Dakota, even though protein is down from last year.

 

The average of analysts' pre-report estimates for other spring wheat production is 552 million bushels, up from the USDA's August estimate of 548 million, according to a Dow Jones survey. The range of estimates was 520 million to 573 million.